Russian precious metals miner Polymetal is seeking a premium listing on the London Stock Exchange, raising about $500 million in a move it hopes will catapult it into the FTSE 100 bluechip index and hand it currency for acquisitions.

Polymetal, which currently has a market capitalisation of about $7 billion based on its Moscow-listed shares, announced on Friday that it would shake up its structure and transfer its Russian shares and UK securities to London.

The move, opening the miner further to foreign investors, will help it take advantage of acquisition opportunities in conditions that have squeezed smaller producers, Chief Executive Vitaly Nesis told Reuters.

We expect to have a much more attractive and universal acquisition currency for potential M&A transactions, he said.

In terms of M&A activity we definitely intend to stay in our key geography, that is the former Soviet Union, and we remain committed to precious metals -- gold and silver.

Shares in JSC Polymetal and its London-listed global depositary receipts (GDRs) will be exchanged for shares in a new Jersey-based holding company, Polymetal International, on a one-for-one basis. It will then seek to delist both its Moscow shares and the GDRs.

The listing plan mirrors measures taken by Russia's top gold miner Polyus Gold , which bought Jersey-registered Kazakh firm KazakhGold to obtain a premium listing. It will also tip the balance of London's blue-chip index even further towards emerging markets and resources.


Polymetal shareholders have long been considering a shift to Britain to increase liquidity, but industry analysts questioned the timing of the deal, which will see one of the world's largest silver miners raising cash while equity and commodity markets are weak and volatile.

FTSE 100 Mexican miner Fresnillo has seen its shares drop 26 percent since the start of this month.

It will be very tough, said one mining analyst who declined to be named. He added the company was pinning its hopes on its well-respected CEO and a large free-float -- about 50 percent -- to set it apart from other Russian and emerging market miners.

Polymetal said it would be raising cash primarily to buy out minority shareholders who do not want London shares or cannot invest in them due to fund restrictions. The remainder of the $500 million offering will be used to repay debt.

A total of 51.9 percent of shareholders have already agreed to the share swap.

This idea of them coming to London has been talked about for a very long time. It is not that people are ambivalent to market conditions -- of course we are very sensitive to that -- but you are offering people simply a better listing in a stock they already own, a source close to the deal said.

Markets are undecided how they feel on an hour-by-hour and minute-by-minute basis.

The exchange offer period begins on Friday, and the company hope to begin unconditional dealing in London on Nov. 2. This could make them eligible for entry into the FTSE in December.

Analysts said the deal would also facilitate an exit for the main shareholders somewhere down the line. Its main shareholders are Czech billionaire Petr Kellner's investment group PPF, Nesis family investment group IST and billionaire Alexander Mamut.

Bobby Godsell, previously chief executive of AngloGold Ashanti Ltd and a veteran of the mining industry, will become Polymetal's independent non-executive chairman.

Shares in JSC Polymetal were virtually flat at 532.4 roubles in Moscow at 0850 GMT.

HSBC and Morgan Stanley are acting as joint sponsors to Polymetal International for the listing. Deutsche Bank, HSBC and Morgan Stanley are acting as joint global co-ordinators and, together with VTB Capital, as joint bookrunners in relation to the offer. Collins Stewart is co-lead manager for the offer.